Obesity remains a serious health problem and it is no secret that many people want to lose weight. Behavioral economists typically argue that “nudges” help individuals with various decisionmaking flaws to live longer, healthier, and better lives. In an article in the new issue of Regulation, Michael L. Marlow discusses how nudging by government differs from nudging by markets, and explains why market nudging is the more promising avenue for helping citizens to lose weight.

Two long wars, chronic deficits, the financial crisis, the costly drug war, the growth of executive power under Presidents Bush and Obama, and the revelations about NSA abuses, have given rise to a growing libertarian movement in our country – with a greater focus on individual liberty and less government power. David Boaz’s newly released The Libertarian Mind is a comprehensive guide to the history, philosophy, and growth of the libertarian movement, with incisive analyses of today’s most pressing issues and policies.

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Topic: Tax and Budget Policy

Steve Moore’s Wall Street Journalcolumn celebrates the global shift to lower tax rates and free markets. To be sure, most foreign politicians are adopting pro-growth policies because of tax competition, not because they share Ronald Reagan’s vision. But the end result is a much stronger global economy:

…the Reagan economic philosophy of lower taxes, less regulation and free trade has never been more in vogue abroad – so much so that it has become the global economic operating system. …nations of old-Europe seem to be in a sprint to see which country can get their tax rates lowest quickest. Nicholas Vardy, the editor of “The Global Guru” economic newsletter calls the phenomenon “Europe’s Reagan Revolution.” …Austria cut its corporate tax rate to keep pace with its neighbor, Slovakia which recently adopted an 19% flat tax. Singapore is cutting taxes to compete with its 16% flat-tax rival Hong Kong. Northern Ireland wants to cut its tax rates so that it can compete with the economic gazelle of Europe, the Republic of Ireland. In 1988 Ireland was a high-unemployment stagnant economy with a 48% corporate tax rate, today that rate is 12.5% and the rest of the world is now desperate to match its economic results. Meanwhile German Finance Minister Peer Steinbrueck sold the latest tax cuts as “an investment in Germany as a business location.” …it is a testament to the Reagan economic revolution launched in 1981 that, a quarter century later, global tax rates are 25 percentage points lower on average today than in the 1970s. And those figures don’t even include this latest round of chopping under Reaganomics 2.0. The enactment of supply-side policies is helping ignite one of the strongest and longest world-wide economic expansions in history.

GOP candidates will also make the argument that if the party retains control, it would mean lower taxes, controls on development and more education spending.

Lower taxes AND more spending on good stuff – it’s hard to beat that combination. And it’s worked so well at the federal level. But it may be harder to deliver in a state that’s required to balance its budget.

A few days ago, New York Times columnist Paul Krugman drew an equivalence between government provision of education and medical care for children:

We offer free education, and don’t worry about middle-class families getting benefits they don’t need, because that’s the only way to ensure that every child gets an education — and giving every child a fair chance is the American way. And we should guarantee health care to every child, for the same reason.

His argument would have more force if government actually ensured that every child gets an education.

I once attended a dinner discussion with a bunch of health care big-wigs. One highly educated woman – she is both an M.D. and a J.D. – began the dinner by declaring, “We need to make health care a right in this country, just as we make education a right.”

Later in the dinner, she complained that her organization’s materials must be written at an 8th-grade level to be understood by their target audience.

I interrupted to ask how she reconciled those two statements: if we really have created a right to education, why the poor reading comprehension? And if we create a parallel right to health care, how many people’s medical care will be stuck at an 8th-grade level? Her answer was non-responsive.

It would be nice if Krugman and others would at least acknowledge that tradeoff.

I almost feel sorry for hard-core leftists. First, they had to endure the agony of watching the Berlin Wall crumble and the Soviet Union break apart. As depressing as that must have been, they now must be horrified that former communist nations are leading the shift to pro-market flat tax systems. But their angst is my joy. I was greatly amused to read this account from the World Socialist Web Site:

The government of Albania has agreed on a standard tax rate (flat tax) of 10 percent aimed at outdoing its East European rivals and attracting international investors. The government in Tirana is determined to transform the impoverished Balkan state into a haven for multinational companies and western speculators. From the start of next year, corporate taxes will be reduced from 20 to just 10 percent. The basic rate of income tax, which amounted to 5 percent for average incomes and a maximum of 25 percent for top earners, had already been changed to a uniform rate of 10 percent for all incomes on August 1. … Measures aimed at massive tax relief for business and the rich are not specific to Albania. It is the result of a vicious competition between states in both the East and West of Europe aimed at creating the best possible conditions for foreign speculators and the wealthy. In the so-called “first round” in the 1990s, the Baltic states began to drastically lower company and income taxes, introducing tax rates of between 25 and 29 percent. These states—with the exception of some “Special Economic Zones”—suffered a loss of interest from foreign enterprises concerned that tax rates were still too high. The “second round” of cuts was initiated by Russia in 2001. Serbia followed in 2003 with the introduction of a flat tax of 14 percent. In 2005 Ukraine, Slovakia, Georgia, and Romania followed suit. The “new round” has now begun with tax reductions in the Czech Republic and Albania. Plans for further radical tax reductions are currently in discussion in Bulgaria, Croatia, and other states.

A British member of the European Parliament urges approval of the new European Union constitution (now being called a reform treaty in an effort to preclude a referendum), arguing in the Guardian that it will promote European-style solidarity rather than the American-style squalor. Yet according to both the IMF and the World Bank, per capita GDP is $8,500 higher in the United States (nearly $13,000 higher according to the CIA and $9,800 higher according to the OECD) than it is in the United Kingdom. As for the less fortunate, a left-wing think tank published a report last year showing that poor people in America have more income than poor people in the U.K. (see Figure 8D). The international data suggests that the European social model does a good job preserving the self-interest of the political class and a crummy job helping people improve their lives:

The reform treaty will explicitly commit European governments to defend and strengthen the European social model. It will enshrine the values of social justice, full employment and solidarity in the EU’s “mission statement” and commit the EU to “a social market economy, aiming at full employment and social progress”. Similarly, the treaty emphasizes that the EU must work to “combat social exclusion and discrimination”, and will be legally required to promote social justice, gender equality and solidarity between generations. It is values such as these that clearly differentiate the EU from the American model of capitalism that allows private wealth and public squalor. …The overwhelming majority of our socialist colleagues across Europe support the reform treaty, despite some reservations, precisely because it will enshrine the European social model.

Americans usually criticize socialized health care systems for forcing patients to wait for care, so it’s a curious thing to find American patients waiting. It happens. I’ve weighed in on Americans waiting for care, as have Tyler Cowen, Matthew Yglesias, Ezra Klein, and others.

Patients seeking an appointment with a dermatologist to ask about a potentially cancerous mole have to wait substantially longer than those seeking Botox for wrinkles, says a study published online today by The Journal of the American Academy of Dermatology.

Researchers reported that dermatologists in 12 cities offered a typical wait of eight days for a cosmetic patient wanting Botox to smooth wrinkles, compared to a typical wait of 26 days for a patient requesting evaluation of a changing mole, a possible indicator of skin cancer.

The article also provides this interesting contrast:

Dr. Michael J. Franzblau, a dermatologist in San Francisco, said doctors typically charged $400 to $600 for a Botox antiwrinkle treatment, for which patients pay upfront because insurance does not cover it.

Meanwhile, doctors have to wait for health insurance to reimburse them for mole examinations, for which they receive an average of $50 to $75, Dr. Franzblau said.

This article reminds me of a 2005 study that called ambulatory clinics to see who is most likely to get an appointment for follow-up care after an ER visit. The study found, roughly:

“Four hundred six (47.2%) of 860 total callers and 277 (64.4%) of 430 privately insured callers were offered appointments within a week.”

People with private insurance and those who offer to pay cash up-front were more likely to get an appointment than Medicaid patients, who in turn were more likely to get an appointment than patients who offered to pay $20 up front and pay the balance later.

Nevertheless, one-third of those with private insurance – and even those who offered to pay cash up-front – still couldn’t get an appointment.

When I discussed that study with my colleage Peter Van Doren, he described it (with precision) as “an out-of-equilibrium situation not resolved by the price mechanism.” With regard to Medicaid, it’s easy to see what’s interfering with the price mechanism: Medicaid prices are set by state governments, and so they don’t change to eliminate shortages (i.e., waits) the way market prices might. The same is largely true of private coverage: those prices are set by insurers, who mostly just track the prices that the federal government sets through the Medicare program [$].

But then why would there still be shortages for patients who come with cash in hand? The price mechanism seems to be working for cash-paying Botox patients, but not for cash-paying ambulatory clinic patients. One possibility is that there might be spillover effects that affect cash-payers in markets dominated by third-party payment and rigid prices. But then wouldn’t we see cash-only ambulatory clinics emerge to capture those customers? If not, that suggested supply constraints to Peter and me.